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By Scott Sumner
For the most part, economists don't give people advice on how to run their lives. Rather we tend to focus on explaining the behavior of consumers and businesses, usually assuming they are at least somewhat rational. One exception is when there is a "principal-agent problem", the case where the people you hire (the agents) have interests that differ from you own interest. Thus economists might advise someone to be a bit skeptical if one's dentist recommends that you get a...
“Economics is really about two stories. One is the story of the old economist and younger economist walking down the street, and the younger economist says, ‘Look, there’s a hundred-dollar bill,’ and the older one says, ‘Nonsense, if it was there somebody would have picked...
Great article! The principal-agent problem rings a bell beyond economics: "Can people be trusted?" What I want to point out is that it is important to question "intentions", if individuals want to behave more rationally. I know I am not saying anything original, but I do think this concept is not enough acknowledged, which leads to mass manipulation.
Klaudia , March 5, 2:19 pm.